Working Paper No . 483 On the Spatial Economic Impact of Global Warming

We propose a dynamic spatial theory to analyze the geographic impact of climate change. Agricultural and manufacturing firms locate on a hemisphere. Trade across locations is costly, firms innovate, and technology diffuses over space. Energy used in production leads to emissions that contribute to the global stock of carbon in the atmosphere, which affects temperature. The rise in temperature differs across latitudes and its effect on productivity also varies across sectors. We calibrate the model to analyze how climate change affects the spatial distribution of economic activity, trade, migration, growth, and welfare. We assess quantitatively the impact of migration and trade restrictions, energy taxes, and innovation subsidies.

[1]  Kei-Mu Yi,et al.  Structural Change in an Open Economy , 2013 .

[2]  E. Rossi-Hansberg,et al.  The Spatial Diffusion of Technology , 2012 .

[3]  Benjamin F. Jones,et al.  Temperature Shocks and Economic Growth: Evidence from the Last Half Century , 2012 .

[4]  W. Brock,et al.  Energy Balance Climate Models, Damage Reservoirs and the Time Profile of Climate Change Policy , 2012 .

[5]  Anastasios Xepapadeas,et al.  Energy Balance Climate Models and the Spatial Structure of Optimal Mitigation Policies , 2012 .

[6]  Per Krusell,et al.  Economics and Climate Change: Integrated Assessment in a Multi-Region World , 2012 .

[7]  Per Krusell,et al.  Optimal Taxes on Fossil Fuel in General Equilibrium , 2011 .

[8]  D. Lobell,et al.  On the use of statistical models to predict crop yield responses to climate change , 2010 .

[9]  S. Hsiang.  Temperatures and cyclones strongly associated with economic production in the Caribbean and Central America , 2010, Proceedings of the National Academy of Sciences.

[10]  William D. Nordhaus,et al.  Economic aspects of global warming in a post-Copenhagen environment , 2010, Proceedings of the National Academy of Sciences.

[11]  Diego Restuccia,et al.  The Role of the Structural Transformation in Aggregate Productivity , 2010 .

[12]  A. Rodrı́guez-Clare,et al.  Trade, Multinational Production, and the Gains from Openness , 2009, Journal of Political Economy.

[13]  P. Aghion,et al.  The Environment and Directed Technical Change , 2009, The American economic review.

[14]  Esteban Rossi-Hansberg,et al.  Spatial Development , 2009 .

[15]  H. Damon Matthews,et al.  The proportionality of global warming to cumulative carbon emissions , 2009, Nature.

[16]  N. Meinshausen,et al.  Warming caused by cumulative carbon emissions towards the trillionth tonne , 2009, Nature.

[17]  J. Fleming.  The Great Warming: Climate Change and the Rise and Fall of Civilizations , 2009 .

[18]  M. Weitzman,et al.  On Modeling and Interpreting the Economics of Catastrophic Climate Change , 2009, The Review of Economics and Statistics.

[19]  Å. Valentinyi,et al.  Measuring factor income shares at the sectoral level , 2008 .

[20]  Torsten Persson,et al.  Uncertainty, Climate Change and the Global Economy , 2008 .

[21]  R. Pachauri.  Climate change 2007. Synthesis report. Contribution of Working Groups I, II and III to the fourth assessment report , 2008 .

[22]  W. Nordhaus.  A Question of Balance , 2017 .

[23]  Sergey Paltsev,et al.  A Forward Looking Version of the MIT Emissions Prediction and Policy Analysis (EPPA) Model , 2008 .

[24]  W. Nordhaus.  The "Stern Review" on the Economics of Climate Change , 2006 .

[25]  David Archer,et al.  Fate of fossil fuel CO2 in geologic time , 2005 .

[26]  Noureddine Krichene.  A Simultaneous Equations Model for World Crude Oil and Natural Gas Markets , 2005, SSRN Electronic Journal.

[27]  R. Price,et al.  Oil Price Developments: Drivers, Economic Consequences and Policy Responses , 2004 .

[28]  R. Schnepf.  Energy Use in Agriculture: Background and Issues , 2004 .

[29]  William D. Nordhaus,et al.  Warming the World: Economic Models of Global Warming , 2000 .

[30]  D. Donaldson,et al.  Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from a 9 Million-Field Partition of the Earth , 2012 .

[31]  R. Sims,et al.  Energy-smart food for people and climate , 2011 .

[32]  Aleh Tsyvinski,et al.  The Agricultural Productivity Gap in Developing Countries , 2011 .

[33]  David R. Lee,et al.  Climate Change: Impact on Agriculture and Costs of Adaptation , 2009 .

[34]  M. Weitzman,et al.  Stern Review : The Economics of Climate Change , 2006 .

[35]  Forthcoming: Journal of the European Economic Association , 2022 .